Friday, September 30, 2016

The Washington Department of Ecologyrecently finalized regulations that place limits on the amount
of greenhouse gases (GHGs) that can be produced by the most GHG-intensive
industries in the state of Washington. The Clean Air Rule, as the regulations are known (hereinafter “the
Rule”), covers entities that emitted an average of 100,000 metric tons or more of
carbon pollution annually over the baseline period of 2012–2016. Covered
entities will be required to
lower their emissions by an average of 1.7% per year over three-year compliance
periods. By 2035, the Rule aims to achieve carbon emission levels 25% below
1990 levels. The Rule has drawn criticism from both industry groups and
environmental groups for diametrically opposite reasons.

Climate activists, such as the youth and legal team at Our Children’s Trust (OCT), who
have filed numerous lawsuits in federal and state courts around the country
asserting that a stable climate is a fundamental human right, among other legal
claims, are unhappy with what they see as a lack of ambition in the Clean Air Rule. They insist, for good reason, that the agency’s actions must be aggressive enough to putthe state on a path to 8% annual reductions in GHG emissions, the rate that
the latest and best available climate science says is required for humanity to
have a decent shot at maintaining stable ecological systems on Earth.
Meanwhile, industry groups have already filed suit against implementation of the Rule, claiming that the Rule
violates the dormant Commerce Clause, regulates extraterritorially, and unduly
burdens interstate commerce.

The Rule is set to go into effect on Oct. 17, 2016 and will apply
to the state’s 24 largest emitters. This number is likely to grow as the cap
drops 5,000 metric tons each year beginning in 2020. Entities covered by the
rule include natural gas distributors, petroleum fuel producers and importers,
power plants, metal manufacturers, and waste facilities. The Rule contains
special provisions for business sectors that the Department of Ecology
determines to be vulnerable to out-of-state competition, such as pulp and
cement manufacturers. Businesses in such industries are deemed “trade-exposed”
and given leeway under the plan in order to prevent leakage (the flight of
carbon polluters across state lines to avoid pollution regulation).

The Rule gives trade-exposed businesses an extra three years
before they must be in compliance with emission standards. Additionally,
trade-exposed businesses can choose to allow the Department of Ecology to set
individual production-based emissions targets specifically for their businesses
based on how they compare to others in their industry.

The Rule is an executive action under the authority of Washington’s
Clean Air Act, and is quite clearly a political compromise. Governor Jay Inslee
was not able to win legislative support for a full-fledged cap-and-trade program that
would have established a cap on overall emissions. Concurrent to Gov. Inslee’s
failure to gain a legislative majority for cap-and-trade, the legal team for Our Children’s Trust won a court decision
last April in King County Superior Court that affirmatively declared that the
Department of Ecology has a “duty to engage in rulemaking to reduce greenhouse
gas emissions in Washington” and that it “shall issue the rule by the end of
calendar year 2016.” The order contains strong language about the dangers of
climate change and the duties of the Department of Ecology, but because of
separation of powers doctrines inherent in the U.S. legal system, stops short
of telling the agency how it must write the rules.

Rather than a full-blown cap-and-trade program, the Clean
Air Rule instead takes a more streamlined approach and puts an individual cap
on each of the state’s largest emitters. The covered sources can still buy and
sell emission reduction credits from one another, but there will not be a
central market to trade allowances, nor an auction of allowances by the state. The
state will, however, maintain a registry of emission allowance transactions so as to ensure integrity in
the trading system. Because the rule does not establish a state-run public
auction of emission allowances, the rule avoids many of the complexities
and administrative burdens associated with a full-on cap-and-trade program.

The Clean Air Rule is designed to help the state achieve and
even surpass compliance with the EPA’s Clean Power Plan. The Clean Air Rule
goes beyond the requirements of the Clean Power Plan in a few key respects.
First, it goes into effect in 2017, whereas the CPP, if upheld against legal challenges, will go into effect in 2022 at the earliest. Second, the
Washington Clean Air Rule possibly reaches a broader cross-section of the
economy than will EPA’s CPP, which only directly targets emissions from power
plants (though states can choose how to reduce GHG emissions across their
respective economies). Finally, the GHG emission cuts mandated by the Rule are
deeper than the cuts mandated by the CPP.

If Washington chooses a rate of emissions compliance path
for the CPP, the average rate of Washington’s GHG emissions (represented in
pounds of CO2 per megawatt-hour, or lbs. CO2/MWh) must
fall from its current level of 1,566 lbs. CO2/MWh to 983 lbs. CO2/MWh—a
37.2% emissions rate reduction by 2030 compared to Washington’s 2005–2012
baseline. If Washington chooses a mass-based compliance path for the CPP, its
overall CO2 emissions must drop from 15,237,542 short tons to
10,739,172 short tons, a 30% drop over the state’s 2005–2012 baseline. Each
state may decide whether it wants to be subject to the mass-based or the
rate-based limit under the CPP, or alternatively take no action and be subject
to a federal implementation plan dictated by the EPA. Under the Clean Air Rule,
Washington mandates that each individual covered entity reduce GHG emissions by
25% below 1990 levels by 2035 (or purchase compliance credits equal to that
amount of emissions reductions).

If the Clean Power Plan is upheld in court and goes into
effect, Washington’s Clean Air Rule contains a provision that specifies that it
will no longer apply to power plants in the state. Power plants will be subject
only to the federal regulation and its lower emission targets. According to the
Department of Ecology’s air quality program manager, the nine baseload power
plants that are covered under the CPP make up only about six percent of
Washington’s emissions, highlighting the important role that industry in
general—and not just the power generation sector—will have in fighting climate
change.

While the Clean Air Rule does not give climate activists
everything they were looking for, it is a step in the right direction. It is a
program that can be built upon in the future. There is much groundwork that
needs to be laid in terms of building institutional capacity and political will
to regulate GHG emissions, and the Rule helps to further that process.
Additionally, the severely entrenched opposition to GHG regulation from
industry makes immediate transformative change politically untenable.

Incremental changes, such as the Clean Air Rule and even the
Clean Power Plan, which contain the seeds of transformative action but are not
by themselves revolutionary, are important pieces that must be put into place
in order to create a comprehensive framework for mitigating GHG emissions. While
those of us who are deeply concerned by the threat of climate change would like
to see all the change happen at once, the nature of the political and economic
beast demands that we will have to continue to rack up small but meaningful (and
hard fought) victories such as the Clean Air Rule and the Clean Power Plan. With
continued pressure on officials, advocacy (and increasingly, defense) in the
courts, and refinement of programs, there is hope that such incremental changes
will add up to transformative change before the science and physics of climate
change slam the door shut on the hope of human civilization living harmoniously
within ecological limits.

Friday, September 23, 2016

On Tuesday, September 27, the U.S.
government will defend EPA’s Clean Power Plan (CPP) in front of an en banc panel of judges at the U.S. Court
of Appeals for the District of Columbia. The CPP regulates the amount of carbon
emissions that a state’s energy generation sector can emit into the atmosphere,
and is considered the signature component of President Obama’s domestic efforts to
mitigate climate change. It is under legal attack from 27 states and industry representatives (referred to herein as petitioners).

Tuesday will be the first time that a court will hear the merits
of the petitioners’ case, West Virginia v. U.S. Envt’l Prot. Agency, but the CPP has already accumulated a
lengthy and unique procedural history. This blog post will provide a brief
primer on the legal drama thus far.

The first chapter in the CPP’s legal saga took place before
EPA had even finalized the rule establishing the CPP. Despite clear statutory text in
the Administrative Procedure Act stating that there must be a final agency action before a suit can be
brought in federal court to challenge an agency action, 12 states and industry
representatives sued on the proposed rule.
Petitioners argued that due to the long planning time inherent in the electricity
sector, states would have to start taking actions to comply with the proposed
rule immediately. Therefore, they argued, they ought to be allowed to sue on
the proposed rule. The D.C. Circuit readily denied this longshot (borderline
superfluous) argument.

As soon as the final rule was released, petitioners again
filed suit. Petitioners asked the D.C. Circuit to halt implementation of the
CPP by granting a stay, but the D.C. Circuit denied the motion. However, as
Staff Attorney Amelia Schlusser blogged about at the time, the U.S. Supreme Court (SCOTUS) itself stepped in to put
a stay
on the implementation
of the CPP. Chief Justice Roberts and Justices Scalia, Thomas, Alito, and Kennedy
voted to enjoin implementation of the rule pending disposition by the Supreme Court or
denial of cert. This move was unprecedented
and was also one of Justice Scalia’s last judicial actions before his death. His
absence from the SCOTUS bench certainly alters the complexion of the case.

After SCOTUS issued the stay, the D.C. Circuit Court of
Appeals decided to go straight to an en banc panel rather than the usual three judge panel, meaning that all judges
on the D.C. Circuit would hear the case. Staff Attorney Amelia Schlusser
covered this development here.

Until just this week (mere days before oral argument) it appeared that two of the twelve
D.C. Circuit judges, including SCOTUS nominee Merrick Garland, were not going to
hear the case, making the CPP’s en banc panel a nine-judge panel. However,
continuing the theme of legal twists and turns that this case has taken before
even reaching oral arguments on the merits, Judge Pillard, who did not
participate in the court’s announcement of an en banc hearing and was therefore
considered unlikely to sit for the case, was added to the panel. Thus, the
panel (as it is currently constituted) sits at ten judges.

The three-judge panel initially scheduled to hear the case
was considered by most observers
to be an advantageous draw for the future of the CPP because two of the three
judges were Democratic appointees. With the nine-judge panel, five judges were
Democratic appointees and four were Republican appointees, more or less
maintaining the ideological balance of the three-judge panel. Judge Pillard,
however, is an Obama appointee, and thus the panel now sits at six Democratic
and four Republican appointees. If you consider the party that appoints a judge
to be a decent proxy for determining a judge’s ideology, then the panel appears
favorable to the government.

Regardless of the makeup, the ten-judge en banc panel will
certainly change the dynamics of the courtroom and how the case will be argued.
With ten judges instead of three, advocates will be less able to target their
arguments directly toward the sensibilities of particular judges.

Furthermore, a ten-judge panel obviously creates a much
greater potential for a tie at the D.C. Circuit than did the three or
nine-judge panels. Normally when an en banc panel in the D.C. Circuit results
in a tie, the opinion of the original three-judge panel is upheld. There is no
original opinion of a three-judge panel in this case. What happens in the event
of a tie in this situation is not altogether apparent. Perhaps the case would
be scheduled for rehearing and there would be an eleventh judge eligible to
hear the case by that time. Perhaps not.

While the CPP is almost certainly destined for review in
front of the U.S. Supreme Court, the ruling of the ten-judge panel at the D.C.
Circuit Court of Appeals is nonetheless an important step in the CPP’s
tumultuous journey. For starters, the current eight member composition of the U.S. Supreme Court creates the potential for another
tie, this time a 4-4 split. Depending on how long the D.C. Circuit takes to
issue an opinion, the earliest SCOTUS could hear the case would be next
February or March. But more likely, the case would not be scheduled until
October. Therefore, it’s possible that there will be a ninth justice when and
if SCOTUS hears the case.

In the case of a 4-4 split, the opinion from the D.C.
Circuit would be upheld without an opinion from SCOTUS. However, many observers
have cautioned that SCOTUS is unlikely to issue a split opinion with no
majority on a case of such extensive nationwide consequence. Ideologically
speaking, a 4-4 split is by no means out of the question. Justice Kennedy, the
ever critical swing vote, and essential piece to the liberal wing of the court
being able to gain a 5-3 majority, is known as being sympathetic to states’
rights arguments. If SCOTUS lands on a 4-4 draw, the Chief Justice could then
reschedule arguments on a rehearing for a later date and hope that reason
prevails on the Hill and Justice Scalia’s vacancy is filled.

The ramifications of the case for the national economy and
the global atmosphere are significant (though prone to hyperbole as well as
legitimate debate). The substantive legal questions at the heart of the case
are likewise significant. The high stakes and tough questions combined with the
perplexing political climate and unexpected passing of Justice Scalia have all
combined to make quite the buildup.

Wednesday, September 21, 2016

A wave power device off the coast of Scotland.Credit: Ocean Power Technologies

September has been a great month for offshore renewables. Earlier
this month, construction was completed on the U.S.’s first
offshore wind farm at Block Island, Rhode Island. More recently, at a naval
test site for hydrokinetic power in Hawaii, Portland-based company, Northwest Energy Innovations (NEI), connected
its wave power device to a nearby military base and the local grid, achieving another
first for the nation. Hydrokinetic power is now generating electricity for
the grid.

Like the Block Island Wind Farm, Hawaii’s new tidal power
plant is a small
project with only two
test buoys. One buoy designed by a Norwegian company generates about 4 kW. NEI’s
buoy, the Azura, can power about a dozen homes by generating up to 18 kW from
wave energy. Like an iceberg, the tidal power generator hides most of its mass
underwater, exposing only 12 of its 62-foot length. NEI plans to enlarge its
design for a larger generator capable of generating over 500 kW and powering a
few hundred homes.

Hawaii offers a welcoming market for new renewable energy.
Like many islanders, including the Block Islanders I mentioned in my
last post, Hawaiians face high electricity prices. In fact, Hawaii has the highest electricity rates in
the U.S. at a whopping $0.33/kWh, more than three times the national average. Facing
high rates from reliance on imported fossil fuels, Hawaiian legislators last
year passed laws to increase the islands’ Renewable Portfolio Standard, establishing
“the
most aggressive clean energy goal in the country.” Hawaii now aims to obtain
100% of its electricity from renewable energy sources by 2045.

The Solutions Project, which analyzed how countries and all
fifty United States could reach 100% renewables, suggests Hawaii
should obtain 2% of its electricity from tidal turbines and wave power
devices by 2050. To achieve this, the state needs another 326
MW from tidal and wave power. That would be about 652 of NEI’s proposed 500
kW devices.

Alternatively, Hawaii could follow Scotland’s example as the
world leader in tidal power. Construction has begun on the
MeyGen project, a tidal energy farm capable of generating up to 398 MW, off
Scotland’s coast. This project aims to be the
world’s first large-scale tidal energy farm.

Unfortunately, political
debate has cast doubts on the MayGen project’s financial viability, since
the United Kingdom reduced its renewable energy subsidies after it decided to
withdraw from the E.U. in the so-called “Brexit” vote. Without the subsidies, the
MayGen project may not be able to install all of the planned turbines. Since
Tuesday, however, renewable advocates have more reason to hope for a cleaner
future when Prime Minister Theresa May announced
at the U.N. talks in New York that the U.K. is still committed to tackling
climate change, promising that the U.K. will ratify the Paris deal.

Climate
change continues to rock the global boat, but by investing in clean,
low-emission renewable energy sources like tidal and wave power, we can better weather
the storm.

Financing renewable energy projects is no small feat. Developers
typically need to lock in a contract proving to stockholders and regulators
that the investment will be recovered. In part, financial difficulties explain
some of the failed offshore wind projects of the past, such as Oregon’s
WindFloat Pacific. The WindFloat Pacific project would have created floating
offshore wind turbines near Coos Bay, Oregon (where the ocean floor is too deep
for anchored turbines like at BIWF). Competing with low electricity prices from
cheap hydroelectric, however, the project was unable to secure a contract
from a power purchaser. (Note though that hydroelectric power generation has
its environmental problems and is not
a guaranteed long-term electricity source.) Without such a contract and lacking
regulatory approval, the Windfloat Pacific Project stalled.

At Block Island, BIWF did not have to compete with cheap
hydroelectric power. Instead, the islanders rely on imported diesel fuel, costing
about $0.50/kwh currently, or five times the average electricity rate in the
U.S. of $0.10/kWh. Under BIWF’s contract with utility National Grid,
rate-paying islanders’ current electricity prices will drop to $0.30/kWh. Mainlanders,
in contrast, who receive the excess wind energy, will face above-market rates
in order to finance the $440
project. But some continue to question
whether the price difference for the islanders reflects the whole story and
will truly result in greater savings for the islanders or the state. (For an
inside look at some of the intricacies of ratemaking, you can read about one of
the Public Utility Commission meetings discussing BIWF here.)

According to
the Rhode Island Public Radio, the true value of BIWF will not be clear for
several years. While analysts can consider the current price of diesel fuel
(the island’s previous fuel source) and compare it to the contractual price for
offshore wind energy, the price of diesel varies. Long-term price stability is one
of many benefits of renewable energy sources. Renewables offer additional
benefits as well, many of which have not historically been considered in
ratemaking, such as lower emissions and greater independence from global
markets. For example, consider this
proposal to build offshore wind farms in order to mitigate hurricane damage
by reducing wind speed at a projected net cost of...zero. Yet whatever the net
cost of a project, it is the upfront cost that can be daunting to developers,
utilities, and regulators.

Fortunately, according to a new study
just published
in Nature Energy, the cost of each type of wind energy (onshore, offshore,
and offshore floating) is projected to drop substantially in the coming
decades. From 2014 to 2030, experts project a 24-30% reduction in costs; by
2050, they project a total reduction of 35-41%. While future costs are
difficult to predict with much accuracy, the study surveyed 163 experts, the
largest elicitation study on energy ever conducted.

In addition to rising market confidence and falling market
prices, offshore wind also has the benefit of the federal government’s
attention: the Department of Energy and Department of the Interior recently
released the National
Offshore Wind Strategy: Facilitating the Development of the Offshore Wind
Industry in the United States. Calling offshore wind energy development a
“significant opportunity” for the nation, the report identifies 34 actions for
the DOE and DOI to take in order to “facilitate responsible, robust, and
sustainable offshore wind development in the United States.” With supportive
governance, competitive market prices, and visionary developers already taking
the plunge into offshore wind development, offshore wind energy may soon be coming
soon to a coast near you.

Monday, September 12, 2016

The last few posts on
this blog series on Tribes & Renewables have explained the role of the National Historic Preservation Act (NHPA)
in ensuring that federal agencies take into account the effects of federally approved
renewable energy projects on tribal cultural resources. In particular, the last post in this series used the proposed Cape Wind Project on
the Nantucket Sound in Massachusetts as an example of poor NHPA implementation,
suggesting that federal agencies should include tribes in the decision process
as early as possible so that their concerns can be better taken into account. While
the NHPA does not require that federal agencies take action to protect cultural
resources, it does require them to consult with tribes about the effects of
their decisions on tribal cultural resources. This final post in the Tribes
& Renewables series examines what federal agencies have done and can do in
the future to improve tribal consultation and reach more informed decisions.

My blog post on the Cape Wind project highlighted the perils of poor
consultation with tribes concerning renewable energy projects; making tribes
feel as though they are a mere afterthought in such decisions may make tribes
distrustful both of federal agencies and of renewable energy projects moving
forward. Besides the straightforward recommendation that agencies should do a
better job implementing the NHPA on a project-by-project basis, both tribes
and federal agencies should also increase efforts to strengthen their relationships
and build understanding outside the context of individual projects.

For example, five
years ago in 2011, the Advisory Council on Historic Preservation and the National
Association of Tribal Historic Preservation Officers coordinated the “Tribal Summit on Renewable Energy:Protecting Tribal Cultural Resources.”
Both federal agency and tribal representatives attended the event, where both sides spoke about their priorities, concerns, and
thoughts on how future renewable energy projects should move forward. Such a
collaborative effort, occurring outside the context of a specific project—where
the stakes are often raised, particularly for tribes trying to protect a
specific important cultural or sacred resource—is exactly the kind of event
that may help tribal and agency representatives understand each other’s
concerns and consult more meaningfully on future projects.

Participants at Forest Service Region 8’s 13th
annual

“To Bridge a Gap” conference. Credit:
U.S. Forest Service

Although no
similar renewable energy development-focused summits have taken place, at least
one of the Forest Service’s nine regions has taken steps to improve working
relationships with tribes more broadly, and does so on an annual basis. Region
8 of the Forest Service, which manages all national forests in the Southeastern
U.S., has for 15 years hosted its annual “To Bridge a Gap” conferenceto help build positive working relationships with tribes. This kind of
working relationship can help an agency, when faced with a decision, to
understand which tribes might be interested and how their concerns might be
addressed.

In trying to
balance renewable energy development with protecting tribal cultural resources
on federal land, consultation under the NHPA plays a key role. The purpose of
the NHPA is to result in better decision making through procedural means; that
is, consulting with tribes to understand concerns about protection of
culturally significant resources allows agencies to come to more informed
decisions about how, where, and whether to site renewable energy projects on
federal land. However, that process only works where both sides have a positive
working relationship. These two examples of summits and conferences are an
excellent model for building those relationships. Hopefully, more federal
agencies, tribes, or other interest groups will organize similar events in the
future.

Conclusion:

This blog series
has covered a range of issues relating to tribes and renewable energy. As a
starting point, it’s important to recognize that American Indian tribes face
disproportionate and unique problems as the Earth’s climate warms (Part I). Fortunately,developing
renewable energy on tribal land not only helps combat climate change, but may
also provide significant economic benefits for tribes (Part II) that can overcome some of the barriers to development on
their land (Parts III & IV) . In terms of renewable energy development on federal
land, tribes are often concerned that such projects may pose a risk to tribal
cultural resources (Part V). Hopefully, as this post and Part VI covered, earnest consultation on individual projects and
better working relationships between federal agencies and tribes can help
renewable development occur in a way that does not compromise important tribal
cultural resources.